If you live in Washington D.C., then you know about the HPAP program - which allows individuals with low income to get money which they could use towards closing costs or as a down payment.  To get all of the details for this program please go here

The problem is that on November 17th the DHCD Director Leila Edmonds suspended the entire HPAP program because of a budget downfall.  At least that is what has been said.  Earlier they had frozen 11 of the 34 million which has been budgeted for program in the 2009 calendar year.

Clearly, this is a bad decision for Washington D.C.  Across the US as well in the district we are seeing very large inventories which are leading to a reduction in property values.  By suspending this very good program, they have essentially given a helping hand to increasing the inventory levels. (more…)

I know that in a number of my workshops participants have asked me about doing BPOs.  So what is a BPO?  A BPO is a Broker Price Opinion.  These can only be done by a licensed real estate broker, or on behalf of the broker, a real estate agent could do these reports.  The purpose of the BPO is to determine what the property should be priced to sell within the current market.  The real estate agent looks at sold, under contract, withdrawn, expired, and active properties that are similar to the property which they are looking at.  As well, they look at the economic information and days on market to determine what is coming in the future to determine both how long it will take for the property to sell as well as what the price could be the price during that time.  For example, if there is a property that is within a neighborhood that usually takes 110 days to sell and within that period you know a major employer will be moving into that area - what do you expect to happen?  Most probably, the prices are going to be going up!  All of this information is put together to come up with the BPO price.  This is very different then an appraisal in which the lender is looking at a snap shot in time.  So they are trying to determine if the property needed to be sold right now - how much the lender would be able to get for it.  The appraisal, unlike the BPO, only takes sold properties into consideration and nothing else.

So why is the BPO such a Hot Topic?

Since there have been such a large number of Short Sales, there have been a HUGE demand BPOs requested by lenders in the attempts to find out what to price the property to sell it now!  So you are interested in BPOs?  I have listed some of the major companies that request BPOs at the end of this blog post.  It is a way for real estate agents to get their information in front of banks so that they can possibly get a chance to list (REO) otherwise known as Real Estate Owned by the Bank.  As well, it is also a way to make for the real estate agent to make a few extra bucks!

Before starting to do BPOs I would strongly suggest listening to the following podcast from the National Association of Realtors and reading the following report as well! The following is the link for the report and podcast  In it contains vital information on LIABILITIES.  Before starting to do BPOs I would strongly suggest speaking to your broker.  I would also suggest that you have all checks payable to your broker as real estate agents are not allowed to get paid directly for real estate services.

BPO Companies:

http://www.valuationsupportservices.com

http://www.iasreo.com/

http://www.clearcapital.com

http://www.marktomarket.com

http://www.ocwen.com

Have fun doing those BPOs and please email me at psingh@rempower.com if you have any questions/concerns or to let me know how it goes!

Prabhjit Singh

So there has been a lot of talk about this new law that the president has signed, and I know that we all want this law to fix the subprime lending issues we are having. There are quite a few laws that are slated to go through the senate, which have already gone through the house, but unfortunately this law is not really going to be helping us. Why not? Good question. Well this law has quite a few drawbacks.

First, this law is only for those individuals which were on an ARM not for loans which just had an increasingly high interest rate to begin with.

Second, the individual must be able to pay the starter rate. This is a large issue and you will know why if you have been in my subprime class, which I suggest everyone to come. I will be teaching it in January at GCAAR. The reason is that a majority of the issues that we have seeing in terms of subprime defaults are individuals whose loans had not even reset yet. They were not even able to the starter interest rate - so this law will not help them.

Third, there are specific dates that the borrower must fit into. The subprime ARM must have been originated between Jan. 1, 2005, and July 31, 2007, and the reset for the ARM must occur for the first time between Jan. 1, 2008, and July 31, 2010.

Fourth, the borrower can never have been late on their payment by more than 60 days in the last 12 months.

Fifth, when the first reset on the ARM is supposed to occur, it has to be more then 10% of the current starter rate.

Sixth, the borrower’s credit score cannot be higher than 660 and it cannot have improved more than 10% since the loan originated.

Seventh, this law only deals with own that are owned by securities, otherwise known as mortgage backed securities. It does not deal with loans that are currently owned by banks, individuals or investors.

Eighth, the loan cannot have reset already, the first time that it is resetting must be during the dates given above.

Clearly, the program is only for a limited group of individuals. It will not help individuals already having issues, but it prevent this from continuing to occur. Basically, this law was created for individuals who are going to be having their first reset of their subprime ARM and they will not be able to pay the new higher interest rate. These individuals must also not be able to refinance their loan due to their credit score or income. If the meet the requirements set forth above, their starter interest rate will be frozen for five years. During that time the government’s hope is that the individual can be able to refinance their loan. The best possibility for refinancing the loan would be the FHA loan, only once the loan limits are increased. This is a great law for the individuals that fit into this narrow category, but for now we have to wait for laws to pass that help the individuals that are currently suffering. If you have clients currently having issues, below I have given resources that you can contact.

If you have questions or comments on this law please don’t hesitate to contact me and/or comment below.

Thanks so much and see you in an upcoming class!

Prabhjit Singh
Further Resources:

http://www.995hope.org/

Resources from NAR for your client